July 12, 2011

One of the largest—and also most controversial—pieces of the Affordable Care Act (ACA or health care reform) is the Independent Payment Advisory Board (IPAB), which was created in an effort to help restrain growth in Medicare expenditures and the purpose of the Board is to reduce the per capita rate of growth in Medicare spending.

Section 4303 of ACA gives IPAB the authority to develop proposals to save costs in the Medicare program that become law unless Congress acts to adopt alternative cost saving proposals that would save at least as much as the IPAB proposals. IPAB is required to consult with the Medicare Payment Advisory Commission (MedPAC) and with the Department of Health and Human Services (HHS) when making such proposals, and is required to submit its proposals to the President and Congress. They will also develop advisory reports and issue recommendations pertaining to Medicare payments to providers and suppliers not subject to “proposals” and also pertaining to private or public/non-federal health care programs.

Consequently, as a recent article from POLITICO noted, although Democrats have been mostly united on health care issues, this week, House Republicans plan to fire their opening salvos against the IPAB — an issue on which Democrats are far from united.

According to POLITICO, “Republicans plan to launch new attacks on the board in two congressional hearings. Democrats are divided over whether to support the health law at all costs or to allow Republicans an opening to repeal a provision.”

Some Democrats, as well as most Republicans and health care providers, argue the panel could arbitrarily cut services to Medicare patients and payments to providers with little congressional oversight. Some Republicans say the board could lead to “rationing” — an argument frequently brought up in response to Democrats’ cries that the Republican budget would ration Medicare and Medicaid.

Maryland Rep. Chris Van Hollen, who sits on the Budget Committee, said IPAB is “an important tool in the toolbox.” “It’s a fail-safe mechanism to make sure that we ensure the solvency of Medicare going forward. It’s an option that’s available,” he said.

However, New Jersey Rep. Frank Pallone, of the Energy and Commerce health subcommittee, has zero interest in defending the board. “I’ve never supported it, and I would certainly be in favor of abolishing it,” he told POLITICO. “I’m opposed to independent commissions or outside groups playing a role other than on a recommendatory basis.”

In recent weeks, several health reform supporters — such as the American Medical Association, the National Committee to Preserve Social Security and Medicare, and Democratic Rep. Allyson Schwartz of Pennsylvania — have voiced support for a Republican plan to repeal the measure.

In fact, Schwartz will be one of the GOP’s star witnesses at the Energy and Commerce Committee hearing. She says IPAB puts Congress’s responsibility in the hands of an outside panel and could lead to arbitrary cuts to doctors, hospitals and other providers.

“It’s far better to achieve savings through reducing errors, duplication and waste and improving outcomes,” she said in a brief interview with POLITICO. “Simply cutting reimbursements is not the best way to go.”

POLITICO recognized however that IPAB does have defenders in Congress — including Rep. Henry Waxman of California, ranking Democrat on the Energy and Commerce panel. Waxman says he has concerns about IPAB but wants to “give it a chance to work.”

“Congress will do its job of continuing to fine-tune Medicare policies to make effective use of Medicare’s purchasing power,” he said. “Fears about IPAB are hypothetical at this point and always leave alternatives to Congress. The harm to Medicare from the Republican plan, if enacted, would be a certainty.”

Van Hollen said IPAB’s opponents have to find an alternative that would help Congress control the rising costs of Medicare. “The burden is on those who want to repeal it to propose an alternative that would accomplish the purpose of preserving Medicare and its solvency,” he said.

Schwartz said the House opposition to IPAB shouldn’t be surprising. The provision was not a part of the House version of the health reform legislation, and when it showed up in the Senate version, over 100 House members — both Republicans and Democrats — wrote letters to then-Speaker Nancy Pelosi (D-Calif.) asking for it to be removed.

“There was a great deal of hesitation about IPAB in the House, and we did not include it in our bill,” she said. “From a House point of view, while there are mixed feelings now about whether we try and repeal it or fix it, it was not our preference” then.

Republicans hope they have found one of the law’s most vulnerable points. Tennessee Rep. Phil Roe and Texas Sen. John Cornyn have introduced bills to repeal the provision. Roe’s bill already has more than 150 co-sponsors, including seven Democrats. Cornyn’s is backed by 31 Senate Republicans.

No Senate Democrat has come out against the board. But the Democrats who face reelection in 2012 are considered prime contenders to vote for repeal if the Republican leadership tries to force Democrats to hold a vote.

Energy and Commerce Hearing on IPAB

Consequenty, the Energy and Commerce Subcommittee on Health will be holding a hearing on IPAB this Wednesday July 13, 2011, at 9:00 a.m. in 2123 Rayburn House Office Building. According to the Committee website and the background memo, the hearing will consist of four panels. The first panel will be composed of Members of Congress. Health and Human Services Secretary Kathleen Sebelius will testify on the second panel. The third panel will be composed of researchers from the Congressional Research Service and various policy analysts. The fourth panel will consist of stakeholders. Below is a breakdown of the hearing: